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Ethics in Accounting > Ch 4 Ethical Paradigms and Foundations > Flashcards

Ch 4 Ethical Paradigms and Foundations Flashcards

1
Q

Give an example of something ethical but not legal.

A

Act of civil disobedience is ethical but not legal (class example)

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2
Q

Give an example of something legal but not ethical.

A

Abortion is legal but not ethical (class example)

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3
Q

According to our authors, the first resource for guidance when a businessperson or a professional accountant faces an ethical problem should be what?

A
  • Corporate and professional codes of conduct
  • EXPLANATION: b/c may apply specifically to problem at hand or provide principles, approaches and frameworks to make ethical decisions
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4
Q

Why should directors, executives and accountants understand consequentialism, deontology, and virtue ethics?

A

In the future, decisions will be increasingly scrutinized by factors other than profit

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5
Q

Business schools must incorporate ethics into curricula in order to receive what accreditation?

A

AACSB (Association to Advance Collegiate Business Schools)

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6
Q

Which organization prescribes ethics education requirements for accountants?

A

IFAC (Int’l Federation of Accountants)

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7
Q

The Ethical Decision Making Framework (EDM) proposes that decisions or actions be compared against what four standards?

A

1) Consequences or well-offness created in terms of net benefits or cost
2) Rights and duties affected
3) Fairness involved
4) Motivation or virtues expected

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8
Q

True or false.

The authors suggest that all four considerations of the EDM model must be examined for an action to be ethically defensible.

A

True

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9
Q

EDM. What philosophical theories underpin the EDM consideration of well-offness or well-being?

A
  • Consequentialism
  • Utilitarianism
  • Teleology
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10
Q

EDM. What philosophical theories underpin the EDM consideration of respect for the rights of stakeholders?

A
  • Deontology (rights and duties)
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11
Q

EDM. What philosophical theories underpin the EDM consideration of fairness among stakeholders?

A
  • Kant’s Categorical Imperative

- Justice as impartiality

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12
Q

EDM. What philosophical theories underpin the EDM consideration of expectations for character traits and virtues?

A
  • Virtue ethics
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13
Q

What are the seven basic components of any decision making model?

A

1) Determine facts
2) Define ethical issue
3) Id major principles, rules, values
4) Specify alternatives
5) Compare values and alternatives
6) Assess the consequences
7) Make decision

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14
Q

True or false.

Psychological egoism tells us how we ought to behave.

A
  • False

- EXPLANATION: Tells us how we “do” behave, not how we “ought” to

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15
Q

True or false.

Ethical egoism tells us how we do behave.

A
  • False

- EXPLANATION: Tells us how we “ought” to behave.

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16
Q

According to psychological egoism, how do humans behave?

A
  • Out of self interest

- Even when we appear to be acting altruistically, we are acting out of self-interest

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17
Q

Which of following is an objection to psychological egoism?

a) There is a distinction between good people and bad people
b) We often do things we don’t want to do out of a sense of obligation
c) You are always conflicted b/w doing the right thing and what you want to do

A

b) We often do things we don’t want to do out of a sense of obligation

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18
Q

According to ethical egoism, how ought we to behave?

A
  • Ought to behave in our own self interest
  • Only have one duty and that is to ourselves
  • And so we should sometimes do things for others, but only when it is in our self interest
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19
Q

Which of the following is an objection to ethical egoism?

a) We all require some charity now and then like from our parents at birth
b) There is only one extreme - absolute individualism
c) There is only one extreme - total altruism/collectivism
d) None of the above

A

a) We all require some charity now and then like from our parents at birth

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20
Q

Almost everyone leading up to the 2008 financial crisis looked after their own narrow self-interest. What is this ethical paradigm called?

A

Ethical egoism

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21
Q

Which of the following best describes deontology?

a) Greatest good for the greatest number; “needs of many outweigh the needs of the few”
b) Act in way that you would have others act; “don’t treat people as a means to an end”
c) Act in your own self interest; “your only duty is to yourself”
d) Act with prudence, courage, temperance, and justice

A

b) Act in way that you would have others act; “don’t treat people as a means to an end”

22
Q

Which of the following best describes virtue ethics?

a) Greatest good for the greatest number; “needs of many outweigh the needs of the few”
b) Act in way that you would have others act; “don’t treat people as a means to an end”
c) Act in your own self interest; “your only duty is to yourself”
d) Act with prudence, courage, temperance, and justice

A

d) Act with prudence, courage, temperance, and justice

23
Q

The AACSB Ethics Education Task force has called for business students to be familiar with what three philosophical approaches to ethical decision making?

A

1) Consequentialism (utilitarianism)
2) Deontology
3) Virtue Ethics

24
Q

What is the goal of utilitarianism?

A
  • GOAL: Maximize utility produced by a decision
25
Q

Under utilitarianism, what does the rightness of an act depend on?

A
  • Rightness of an act depends on its consequences to multiple stakeholders
  • Act is morally right if it maximizes net good
26
Q

What is one major criticism of utilitarianism?

A

Reduces human welfare to numbers in a calculation

27
Q

Applying the utilitarian theory requires what three steps?

A

1) Determination of which individuals will be affected by action in question
2) Cost benefit analysis
3) Choice among alternative actions that will produce maximum societal utlility

28
Q

How does deontology contrast utilitarianism?

A

Focuses on obligations/duties, and rights of individuals, rather than consequences

29
Q

What is Kant’s Categorical Imperative?

A
  • Always act in such a way that your action should become universal law
  • Every human being must be treated as an end, not a means to an end (e.g. Golden Rule)
30
Q

What is the Golden Rule?

A

Do unto others as you would have them do unto you

31
Q

What are some virtues that Aristotle identified?

A
  • Prudence
  • Courage
  • Temperance
  • Justice
32
Q

What are some virtues in the Christian faith?

A
  • Faith
  • Hope
  • Charity
33
Q

What is virtue ethics concerned with?

A

Concerned with the motivating aspects and moral character demonstrated by decision makers

34
Q

Ethics is derived form the Greek term “ethikos” which means what?

A

Character

35
Q

______ are character traits that dispose a person to act ethically and thereby make that person a morally good human being.

a) Norms
b) Moral judgements
c) Virtues
d) Values
e) Ethical judgements

A

c) Virtues

36
Q

Which of the following is a criticism of virtue ethics?

a) The interpretation of virtue is culturally sensitive
b) One’s perception of what is justifiable and right is to some degree influenced by ego or self-interest
c) The interpretation of what is justifiable and right is culturally sensitive
d) Two of the above
e) All of the above

A

e) All of the above

37
Q

Prior to the recent financial scandals and governance reforms, few corporate leaders were selected for their “virtues” other than their ability to make profits. Has this changed?

A
  • Yes

- Directors now expected to select and monitor senior executives based in part on their ethicality

38
Q

What is a sniff test?

A

Preliminary test of the ethicality of a decision

39
Q

Which of the following is a rule of thumb for ethical decision making?

a) The Intuition Ethic
b) The Professional Ethic
c) The Disclosure Rule
d) The Golden Rule
e) Two of the above
f) All of the above

A

f) All of the above

40
Q

What does the Disclosure Rule state?

A

If you are comfortable w/ an action/decision after asking yourself whether you would mind if all your associates, friends, and family were aware of it, then you should act/decide

41
Q

What does the Intuition Ethic state?

A

Do what your “gut” feeling tells you to do

42
Q

What does the Professional Ethic state?

A

Do only what can be explained before a committee of your professional peers

43
Q

What does the Virtue Principle state?

A

Do what demonstrated the virtues expected

44
Q

What was the traditional view of corporate accountability?

A
  • To maximize impact of a decision on a company’s shareholders
45
Q

Which of the following is a way that the traditional view of corporate accountability has been modified?

a) Expand focus from short term profits to long term profits
b) Account for the rights and claims of non-shareholder groups in corporate decision making
c) All of the above
d) None of the above

A

c) All of the above

46
Q

What are the four fundamental interests of stakeholders that must be satisfied for a decision to be considered ethical?

A

1) Well-offness (benefits > costs)
2) Fairness (fair distribution of benefits and burdens)
3) Right (nobody’s rights offended)
4) Virtuosity (demos virtues reasonably expected)

47
Q

The costs of environmental clean-ups absorbed by downstream individuals, companies, or municipalities are referred to as what?

A

Externalities

48
Q

In identifying stakeholders and ranking their interests, the authors suggest that stakeholders and their interests be evaluated on what three dimensions?

A

1) Legitimacy (legal or moral right to influence org)
2) Power (influence on org through media, government)
3) Urgency (perceived or real)

49
Q

What was the basis of Martha Stewart’s reputation?

A
  • Icon

- Represented successful women who made their success by being astute and hard-driving in a man’s world

50
Q

Why did MSO’s stock price decline due to Martha Stewart’s loss of reputation?

A
  • Dark cloud over her image

- Which impacted her company’s image (she was the company)

51
Q

How could Martha have handled her crisis better?

A
  • Donated $45,000 of savings to charity
  • This would’ve shown that amount of money involved wasn’t enough to motivate her to break the law and damage her reputation
52
Q

What ethical paradigm does Martha Stewart follow?

A

Ethical egoism

Ethics in Accounting (13 decks)

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